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April 26th, 2022 | 11:12 CEST

Varta, Nordex, Nevada Copper, JinkoSolar: supply chain broken, copper is the new gold!

  • GreenTech
  • Solar
  • Wind
  • Copper
  • E-Mobility
Photo credits: pixabay.com

Global copper inventories and production rates are currently below the level of recent years. This is due to the limited availability of new projects, which can only be put into production slowly and will still consume some investment. In copper recycling, the industry is making progress, but the necessary rates of increase to supply new markets remain too low. Then there are the troubled supply chains, which make it difficult to move larger volumes of raw material at the moment. In the first four months of 2022, copper inventories on commodity futures exchanges were below 2021 levels, and LME inventories in London are likely to fall further because of the demand-pull. The physical copper shortage is not hysteria - it is now a reality on the exchange with spot prices above USD 10,000. Where are the opportunities for investors willing to take risks?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: VARTA AG O.N. | DE000A0TGJ55 , NORDEX SE O.N. | DE000A0D6554 , JINKOSOLAR ADR/4 DL-00002 | US47759T1007 , NEVADA COPPER CORP. | CA64128F7039

Table of contents:


    Ryan McDermott, CEO, Phoenix Copper
    "[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper

    Full interview

     

    Varta - Well financed in the race for the high-performance battery

    Varta was able to recapture the important mark of EUR 90 last week, but already yesterday it went below again. Technically, the focus is now on the zone at EUR 80 to 85, and here the share should not fall through. Unfortunately, the trend for growth stocks has been pointing downwards since the strong interest rate increases. Varta would now have to deliver a surprise to turn the trend into the positive.

    The offensive announced before Easter nevertheless continues to provide fantasy for Varta. The Company wants to return to the growth path in the CoinPower area as quickly as possible because it has a good standing here and has a significant market share. Cash flows from this business could thus be diverted elsewhere into investments. However, rising raw material prices and ongoing supply chain difficulties have slowed the Company from Ellwangen down in the first quarter of 2022. Varta plans to pass on the current higher costs to its customers through price increases. Of course, this depends on the competitive situation in the battery market.

    Before Easter, Varta secured a EUR 250 million loan on very favorable terms. With the fresh funds and the cash flow from current business, the Group is solidly positioned overall to finance the expansion of lithium-ion capacities. One focus will be the large-format round cell V4Drive, and here automakers are waiting for the first serviceable prototypes.

    Analysts are currently somewhat divided. The analysis house Warburg has lowered the price target for Varta from EUR 113 to EUR 110, but left the rating at "Buy". Berenberg, on the other hand, only sees a hold position with a price target of EUR 105. We stick to our observe only recommendation. Currently, no investment in Varta imposes itself. **Set a tight stop at EUR 83.80.

    Nevada Copper - Delivered copper volumes increase

    **With the clear commitment of the European governments in favor of climate change, the industry has now turned to GreenTech. The high prices for fossil fuels further strengthen the investment pressure in the alternative sectors. If Economics Minister Habeck is now talking about significantly shorter approval times, things could really start to move across the board.

    In recent months, there has been nothing but positive news at Canada's Nevada Copper. The former problem child is mining from the US state of Nevada. Now the financial transactions for the mine construction are done and as of a few weeks the production in the company-owned Pumpkin Hollow project is slowly ramping up. In March alone, the underground mine mined 3,000 tons of copper-bearing rock per day. The operational focus is now on maintaining and increasing the production rate. It is still planned to reach a capacity of 4,500 to 5,000 tons per day in the third quarter of 2022. Ramp-up is progressing very positively to date.

    The development rates of the first quarter of 2022 have increased by 32% compared to the fourth quarter of 2021. The mined ore tonnages are already 73% higher in the quarterly comparison Q1 to Q4. In addition to copper, there is also gold and silver mineralization in the properties. At the nearby open pit copper project, the technical equipment has now arrived and the drilling program is starting as planned. The fully permitted project, like a potential solar project, is part of a larger feasibility study in 2022.

    NCU shares are currently trading in a narrow band between CAD 0.60 and 0.70, with good turnover on German exchanges. The new copper producer is thus currently worth CAD 270 million on the stock market. **With the progress at the mine, the shares should also start to move soon.

    Nordex SE versus JinkoSolar - Which GreenTech stock to bet on now?

    In the current stock market phase, GreenTech stocks are going up and down. Problems in the sector are the high dependence on the availability of high-tech metals and the current problems in the supply chains. The order situation can be described as lush in some cases, but the ability to deliver is limited. As a result, all stocks are losing out on calculated growth potential.

    The wind turbine manufacturer Nordex is a large processor of copper and other metals. On the procurement side, prices have risen so sharply that the promised installations hardly bring any profit into the books after completion. In some cases there are also considerable delays due to disrupted supply chains, and this is also putting permanent pressure on the EBIT margin. Operationally, it looks as if the present scenario will continue for a few more months.

    JinkoSolar produces mainly in China - and this is where the next Corona lockdown is currently taking place. The photovoltaic manufacturer has further strongly increased its sales in the past fiscal year. JinkoSolar is increasingly focusing on its "n-type" products and decentralized photovoltaic systems, for which there is strong demand worldwide. A number of milestones have already been achieved in the current year. For example, its main operating subsidiary Jiangxi Jinko is now successfully listed on the Shanghai Stock Exchange. It has brought JinkoSolar revenues of EUR 1.5 billion, which will mainly go towards faster technology development and business expansion. For the first quarter, the Chinese photovoltaic manufacturer is now targeting sales of between 7.5 and 8.0 gigawatts. That would be a continuation of the growth shown recently.

    While Nordex stock is already consolidating strongly again after its rapid rise in March, JinkoSolar is able to establish itself quite well in the upper chart range. For Nordex, there is a good technical buy zone in the 12.50 to 13.50 range, with 50% upside opportunity. JinkoSolar should be provided with a stop price at EUR 45, so that valuable profits remain in the books.


    The rally in GreenTech stocks started with the oil and gas price explosion in 2022. Currently, however, all growth stocks are suffering from soaring interest rates and negative technical trends on the NASDAQ. Nevada Copper is just coming out of the starting blocks and can realize its full potential in 2022.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author



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